Bath debates tax subsidy for shipyard expansion
BATH — Audience members who packed the City Council chambers Wednesday debated at length the pros and cons of a tax increment financing agreement proposed for Bath Iron Works.
The City Council could decide Nov. 20 whether to grant the tax break to the shipyard.
In the meantime, a group called Bath Citizens for Responsible TIF Action, which opposes the agreement, has organized a forum on the issue at City Hall on Wednesday, Nov. 13, at 6:30 p.m.
BIW wants to build a more than 51,000-square-foot addition to the south end of the existing Ultra Hall, and to construct a two-bay blast/paint building and a combined boiler/compressor building.
The shipyard, which received has site plan approvals from the Planning Board for the projects, and received second and final contract rezoning approval from the City Council Wednesday for the addition, proposes a 25-year TIF that would have the shipyard and city equally share tax revenues generated by the project.
According to a BIW fact sheet presented Wednesday, the shipbuilder plans to invest $32 million into the Ultra Hall, which the company projects could generate about $500,000 in new taxes each year. Through the TIF arrangement, BIW's tax obligation on the facility would be reduced by $250,000 each year for the life of the TIF, while the city would get the rest.
The TIF would "shelter" the new value from Bath's state-determined valuation.
BIW and the city previously created two TIF districts in 1997 that include the shipyard.
"This is about building ships in Bath, Maine, and whether BIW can competitively bid for future Navy and Coast Guard work against Ingalls Shipbuilding in Mississippi, which benefits from many state, county and municipal financial incentives that lower its cost," according to the BIW fact sheet. "In addition, BIW must overcome higher costs for energy, health care, taxes and insurance."
It adds that "ships are awarded on the basis of lowest cost and BIW must do everything it can to be the low cost provider in order to win work that will secure our collective future in shipbuilding in the City of Bath."
But opponents of the TIF have argued that BIW parent company General Dynamics is doing well financially, and that the shipyard does not need another tax break.
"The crux of the issue, for Bath citizens, is property taxes," said Jerry Provencher of Winslow Court, noting that half of the new taxes covered by the agreement would go back to the company if the city approves the TIF, but that Bath would get all the revenue if it did not.
"If General Dynamics feels that they need to invest to modernize and remain competitive, and be in a position to bid on more contracts, they should do it," he said. "Economic conditions are the best they have been in some time. General Dynamics (has) been very profitable over the last six years."
"This is really not about General Dynamics; it's about Bath Iron Works," Jon Fitzgerald, vice president and general counsel with the company, told the City Council. "Bath Iron Works stands on its own when we bid for work and we attempt to gain new shipbuilding work. There's no box that we check off that gives us a special leg up because we're owned by General Dynamics. What matters is what price is on the bottom line, what price is on that bid for the ships that we're trying to win."
Resident Gary Anderson noted that "BIW keeps labeling the financing of their proposed project as a continuing partnership with the city, rather than calling it what it is: another tax break."
He said the arrangement is not a partnership, but rather an arrangement through which BIW will share something that is actually owed to the city – "an arrangement which other property owners are not offered. When a person renovates their home, there is no partnership with the city that returns half of their increased property taxes."
Anderson added that "it would indeed be nice if the city was actually a business partner with General Dynamics. Then we could share in their huge profits rather than financing their capital improvements with taxes deferred, and to the detriment of our shrinking city coffers."
Amy Lent of York Street, executive director of the Maine Maritime Museum, located near Bath Iron Works on Washington Street, praised her institution's relationship with the shipyard.
"They're very honest people," she said. "... And if they're asking the city for this, they're not trying to stick it to the city; they're doing it because it's really important."
She noted that Bath had 22 shipyards in 1850, and only BIW remained by 1920.
"Historically, things go away," Lent said. "... There's not a whole lot of shipbuilding going on in America anymore ... if they close, there's no other shipbuilder that's going to come in and take their place."